1、Kim Lee manages a variety of accounts at Superior Investments. Some are permitted to invest in tax-exempt issues only; others may not invest in a stock unless it pays dividends. Lee is researching a biotech firm specializing in the analysis of "mad cow" disease. While touring company facilities and meeting with management, she learns that they believe they may have found a way to reverse the disease. Moreover, one manager conjectured, "Suppose that we reversed the disease in someone who didn't even have it? We might then be able to boost that individual's IQ into the stratosphere!" Lee returns to her office and buys shares for all accounts under her supervision. This action is:

A)   a violation of the Standard concerning appropriateness and suitability of investment actions.

B)   appropriate given the obvious potential of the therapy.

C)   only permissible if the account holders are contacted first before the shares are purchased.

D)   a violation of the Standard concerning fiduciary duties.

2、Bob Hatfield, CFA, has his own money management firm with two clients. The accounts of the two clients are equal in value. Hatfield has been trading on the clients’ behalf with a single brokerage firm for several years. Because of his many years of business, the brokerage firm occasionally gives Hatfield shares in an initial public offering (IPO) to sell to his clients. Hatfield has a policy of allocating the IPO shares equally between the portfolios of the two clients. This policy is:

A)   congruent with Standard III(C), Suitability.

B)   a violation of Standard III(C), Suitability.

C)   a violation of Standard III(B), Fair Dealing.

D)   a violation of Standard III(A), Loyalty, Prudence, and Care.

3、An analyst thinks that a major change in the tax law will benefit holders of utility company stocks. She immediately begins calling all her clients and telling them of the upside potential of investing in such assets now. Based upon this information, this is most likely:

A)   a violation of Standard III(C), Suitability.

B)   congruent with Standard III(C), Suitability.

C)   a violation of Standard V(A), Diligence and Reasonable Basis.

D)   congruent with Standard V(A), Diligence and Reasonable Basis.

4、If an analyst has a policy of making an inquiry into a client’s financial situation, investment experience, and investment objectives regularly, this is:

A)   a violation of Standard III(E), concerning client confidentiality.

B)   a violation of the disclosure requirements of Standard VI(A).

C)   congruent with Standard III(C), Suitability.

D)   none of these.

5、What is the required frequency for updating information on each client’s financial situation, investment experiences, and investment objectives?

A)   Regularly.

B)   Every year.

C)   Every other year.

D)   Only during the first meeting with the client.

答案和详解如下：

1、Kim Lee manages a variety of accounts at Superior Investments. Some are permitted to invest in tax-exempt issues only; others may not invest in a stock unless it pays dividends. Lee is researching a biotech firm specializing in the analysis of "mad cow" disease. While touring company facilities and meeting with management, she learns that they believe they may have found a way to reverse the disease. Moreover, one manager conjectured, "Suppose that we reversed the disease in someone who didn't even have it? We might then be able to boost that individual's IQ into the stratosphere!" Lee returns to her office and buys shares for all accounts under her supervision. This action is:

A)   a violation of the Standard concerning appropriateness and suitability of investment actions.

B)   appropriate given the obvious potential of the therapy.

C)   only permissible if the account holders are contacted first before the shares are purchased.

D)   a violation of the Standard concerning fiduciary duties.

The correct answer was A)

Given the variety of accounts under her supervision, it is not likely the shares of a speculative biotech firm would be suitable for all accounts. Placing such shares in all accounts indicates that she has failed to consider the appropriateness and suitability of the investment for each account, and this places her in violation of Standard III(C).

2、Bob Hatfield, CFA, has his own money management firm with two clients. The accounts of the two clients are equal in value. Hatfield has been trading on the clients’ behalf with a single brokerage firm for several years. Because of his many years of business, the brokerage firm occasionally gives Hatfield shares in an initial public offering (IPO) to sell to his clients. Hatfield has a policy of allocating the IPO shares equally between the portfolios of the two clients. This policy is:

A)   congruent with Standard III(C), Suitability.

B)   a violation of Standard III(C), Suitability.

C)   a violation of Standard III(B), Fair Dealing.

D)   a violation of Standard III(A), Loyalty, Prudence, and Care.

The correct answer was B)

According to Standard III(C), the analyst must consider the appropriateness and suitability of an investment recommendation for each portfolio or client. Having a fixed policy of adding investments to portfolios without evaluating their suitability is a violation of Standard III(C). The action does not violate either of the other standards listed.

3、An analyst thinks that a major change in the tax law will benefit holders of utility company stocks. She immediately begins calling all her clients and telling them of the upside potential of investing in such assets now. Based upon this information, this is most likely:

A)   a violation of Standard III(C), Suitability.

B)   congruent with Standard III(C), Suitability.

C)   a violation of Standard V(A), Diligence and Reasonable Basis.

D)   congruent with Standard V(A), Diligence and Reasonable Basis.

The correct answer was A)    

According to Standard III(C), the analyst needs to determine the suitability of an investment for each client. It is doubtful that all her clients are identical in their needs. According to the information, the analyst mentions the upside potential but does not mention the downside risk. Although the information says that she thinks that the change in the tax law will benefit holders of utility company stocks and says nothing of how she arrived at this conclusion, we do not know if she has or has not made her decision on a reasonable basis.

4、If an analyst has a policy of making an inquiry into a client’s financial situation, investment experience, and investment objectives regularly, this is:

A)   a violation of Standard III(E), concerning client confidentiality.

B)   a violation of the disclosure requirements of Standard VI(A).

C)   congruent with Standard III(C), Suitability.

D)   none of these.

The correct answer was C)    

Standard III(C) explicitly says that an analyst should make such inquiries and update information regularly. Client confidentiality is addressed in Standard III(E) but that is with respect to how the analyst treats the information once it is obtained. Standard VI(A) addresses the information that an analyst must disclose to his/her employer, clients and prospects.

5、What is the required frequency for updating information on each client’s financial situation, investment experiences, and investment objectives?

A)   Regularly.

B)   Every year.

C)   Every other year.

D)   Only during the first meeting with the client.

The correct answer was A)

Standard III(C) Suitability. Members shall make a reasonable inquiry into a client’s financial situation, investment experience, and investment objectives prior to making any investment recommendations and shall reassess and update this information regularly.